EU Delays Labelling Lithium Toxic as Concerns From EV Industry Mount

The prospect that the European Union will classify lithium as toxic is adding to worries in the electric-vehicle battery industry that policy makers aren’t doing enough to attract investment and the EU will lose out to the U.S., an attractive destination for such companies partly thanks to the Inflation Reduction Act.

Last week, the European Commission was set to give a final ruling on whether lithium, a crucial battery input, should be classified as a toxic substance. The commission’s scientific arm recommended that it do so.

The decision by the EU’s executive arm has now been pushed back into the new year, the second delay in as many months. Europe’s nascent battery companies are warning that investors may be drawn away from the continent to the U.S. where the IRA has created strong incentives to establish supply chains in the country.

If lithium is labeled toxic, those handling it would be subject to extra safety measures, adding millions in extra costs for prospective lithium refiners and battery makers in Europe, expenses that are absent in the U.S., China and the U.K., industry experts say.

So far, within the European battery industry, Sweden’s Northvolt AB has been one of the few victories for the EU. Northvolt operates the bloc’s flagship battery project, a gigafactory in the north of Sweden. The company is currently valued at $12 billion and is a supplier for some major car makers including Bayerische Motoren Werke AG and Volkswagen AG.

The Northvolt Ett gigafactory started producing commercial batteries in May of this year and plans to scale up to 60 gigawatts hours—equivalent to one million electric vehicles a year—by 2025/26. At least two more gigafactories in Sweden along with one in Germany are already in the works.

Northvolt has said, however, that it remains lukewarm about making further investments in Europe due to the pull of the U.S., saying that production costs are 30% lower there because of the IRA.

Earlier this month, European Commission President Ursula von der Leyen alluded to worries about critical supply chains and the IRA. She said the EU should “simplify and adapt” its rules that limit state funding to make it easier for public investments.

For those looking to establish European battery production, the EU’s position on electric vehicles remains confusing. On the one hand, there are incentives, such as the Critical Raw Materials Act; on the other hand, the proposed classification of lithium as toxic could stifle refining projects and drive away investment.

“At a time when other nations such as the U.S. are opening their doors, taking down barriers and putting their taxpayer’s money on the line to strategically attract and build battery-metals supply chains […] Europe is putting up barriers to companies in this market,” said Richard Taylor, a founding director of Trafigura-backed Green Lithium Refining Ltd.

“If the opportunity is not attractive in Europe, companies won’t bother setting up [there],” Mr. Taylor said.

In contrast, the IRA is quite clear: promising tax credits and subsidies for American-made electric vehicles and components, while also favouring raw material supplies from countries that have free trade agreements with the U.S.

“America is doing the right thing, they are supporting this massively with the IRA,” said Lars Carlstrom, founder and CEO of two gigafactory startups, Statevolt in California and Italvolt in Italy. “We haven’t seen anything such as it, and in Europe all of a sudden when we thought we were well supported here, it is actually nothing compared with what America is now doing.”

The marketplace has spoken and, at least for now, it’s showing preference for hybrids and plug-in hybrids (PHEVs) over battery electrics. That makes Toyota’s foot dragging on EVs (and full speed ahead on hybrids) look fairly wise, though the timeline along a bumpy road still gets us to full electrification by 2035.

Italian supercar producer Lamborghini, in business since 1963, is also proceeding, incrementally, toward battery power. In an interview, Federico Foschini , Lamborghini’s chief global marketing and sales officer, talked about the new Urus SE plug-in hybrid the company showed at its lounge in New York on Monday.

The Urus SE interior gets a larger centre screen and other updates.
Lamborghini

The Urus SE SUV will sell for US$258,000 in the U.S. (the company’s biggest market) when it goes on sale internationally in the first quarter of 2025, Foschini says.

“We’re using the contribution from the electric motor and battery to not only lower emissions but also to boost performance,” he says. “Next year, all three of our models [the others are the Revuelto, a PHEV from launch, and the continuation of the Huracán] will be available as PHEVs.”

The Euro-spec Urus SE will have a stated 37 miles of electric-only range, thanks to a 192-horsepower electric motor and a 25.9-kilowatt-hour battery, but that distance will probably be less in stricter U.S. federal testing. In electric mode, the SE can reach 81 miles per hour. With the 4-litre 620-horsepower twin-turbo V8 engine engaged, the picture is quite different. With 789 horsepower and 701 pound-feet of torque on tap, the SE—as big as it is—can reach 62 mph in 3.4 seconds and attain 193 mph. It’s marginally faster than the Urus S, but also slightly under the cutting-edge Urus Performante model. Lamborghini says the SE reduces emissions by 80% compared to a standard Urus.

Lamborghini’s Urus plans are a little complicated. The company’s order books are full through 2025, but after that it plans to ditch the S and Performante models and produce only the SE. That’s only for a year, however, because the all-electric Urus should arrive by 2029.

Lamborghini’s Federico Foschini with the Urus SE in New York.
Lamborghini

Thanks to the electric motor, the Urus SE offers all-wheel drive. The motor is situated inside the eight-speed automatic transmission, and it acts as a booster for the V8 but it can also drive the wheels on its own. The electric torque-vectoring system distributes power to the wheels that need it for improved cornering. The Urus SE has six driving modes, with variations that give a total of 11 performance options. There are carbon ceramic brakes front and rear.

To distinguish it, the Urus SE gets a new “floating” hood design and a new grille, headlights with matrix LED technology and a new lighting signature, and a redesigned bumper. There are more than 100 bodywork styling options, and 47 interior color combinations, with four embroidery types. The rear liftgate has also been restyled, with lights that connect the tail light clusters. The rear diffuser was redesigned to give 35% more downforce (compared to the Urus S) and keep the car on the road.

The Urus represents about 60% of U.S. Lamborghini sales, Foschini says, and in the early years 80% of buyers were new to the brand. Now it’s down to 70%because, as Foschini says, some happy Urus owners have upgraded to the Performante model. Lamborghini sold 3,000 cars last year in the U.S., where it has 44 dealers. Global sales were 10,112, the first time the marque went into five figures.

The average Urus buyer is 45 years old, though it’s 10 years younger in China and 10 years older in Japan. Only 10% are women, though that percentage is increasing.

“The customer base is widening, thanks to the broad appeal of the Urus—it’s a very usable car,” Foschini says. “The new buyers are successful in business, appreciate the technology, the performance, the unconventional design, and the fun-to-drive nature of the Urus.”

Maserati has two SUVs in its lineup, the Levante and the smaller Grecale. But Foschini says Lamborghini has no such plans. “A smaller SUV is not consistent with the positioning of our brand,” he says. “It’s not what we need in our portfolio now.”

It’s unclear exactly when Lamborghini will become an all-battery-electric brand. Foschini says that the Italian automaker is working with Volkswagen Group partner Porsche on e-fuel, synthetic and renewably made gasoline that could presumably extend the brand’s internal-combustion identity. But now, e-fuel is very expensive to make as it relies on wind power and captured carbon dioxide.

During Monterey Car Week in 2023, Lamborghini showed the Lanzador , a 2+2 electric concept car with high ground clearance that is headed for production. “This is the right electric vehicle for us,” Foschini says. “And the production version will look better than the concept.” The Lanzador, Lamborghini’s fourth model, should arrive in 2028.

EU Delays Labelling Lithium Toxic as Concerns From EV Industry Mount

European battery makers say the EU needs to offer better incentives to compete with the U.S. Inflation Reduction Act